Floods take toll on profits
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Only a few listed firms managed to show year-on-year growth
Net profits of most listed property dropped in 2011 due to the impact of the floods in the last quarter of the year as a result only a few firms managed to show growth in net profit year on year.
The firms whose net profits grew were Land & Houses with net profit growth of 41.56 per cent year on year mainly from gains after it sold its subsidiary in Indonesia. Sansiri recorded net profit growth of 6.3 per cent year on year while LPN Development showed a net profit of Bt1.91 billion, up 17.17 per cent year on year.
Most property firms reported lower net profit in 2011 compared to 2010 as most of their customers delayed their decision to transfer their residences at locations that were hit by the floods. Home-buyers, who planned to buy a residence even at locations not hit by the floods, also delayed their decision.
The firms also faced higher construction cost, which rose between 5-10 per cent and were directly reflected in the financial results for the year.
Pruksa Real Estate recorded net profit of Bt2.83 billion at the end of 2011, declining 18.67 per cent from 2010. Asian Property Development showed a 30.18-per-cent drop in net profit for 2011 compared with 2010. Quality Houses dropped 57.90 per cent in 2011 compared with 2010.
SC Asset Corporation chief operating officer Kree Dejchai said the company’s net profit at the end of 2011 was lower than 2010 following rise in the costs of construction raw materials and energy. But the company cannot increase its residential price to cover the higher cost when there is high competition, and there was a drop in demand to buy residences in the last quarter of last year.
However, the company’s board of directors has approved a dividend of Bt0.65 per share for 2011, he said.
Meanwhile, Pruksa Real Estate president and CEO Thongma Vijitphongpun said that the company plans to restructure its business to cut management and construction costs after the company’s net profit dropped under the impact of the floods. “We have to take time to reorganise our business to match with the new business environment,” he said.
Market recovery
Most property firms believe that their financial results will improve in the second half of this year when the people and home-buyers gain confidence in the government measures to manage the floods.
“In the first two months of this year, we recorded pre-sales of Bt1.5 billion which is significant as it shows that demand to buy residences is returning to the market,” Thongma said.
Somchao Tanterdtham, managing director of NC Housing, which develops residences in the northern Bangkok or Rangsit area, said that customers who had cancelled their plans to buy residential property after the floods are now returning after knowing the company can protect its projects from floods.
“We recorded a sales average of Bt300 million per month in the first two months of this year, nearly the same as last year, as a result we believe that the market will recover in the second half of this year,” he said.
Sansiri’s president Srettha Thavisin said the company recorded pre-sales of Bt2 billion in the first two months of this year. That means the market had started to recover and it will return to normal in the second half of this year.
